There are three major types of Party system in use in various countries: Mono party system, Bi party or two party system and Multi-party system.
Mono-party system is a political system in which only one party controls and runs the government. Mono-party system is not expensive. There is also stability in this type of a system as there is no opposition and there is no chance of being voted out of power. There is no choice to the voter.
A Bi party system is a type of system in which power alternates between two parties only. The party that gets the majority forms the government and the other party forms opposition. There is stability in this system as it comes to power having won a majority. Thus there is continuity of policies and programs.
There is a strong opposition as only one party forms the opposition. The choice is however limited between two parties. Hence public opinion cannot be expressed properly.
A Multi-party system is a system in which several parties compete for power and more than two parties have a reasonable chance of coming into power either on their own or in alliance with others.
It is a democratic system of representative government where the opinions of the people are represented adequately. There is a wide spectrum of choice for the voters.
In this system the coalition government works keeping inmind the interest of the people. A coalition government is generally a multi party system when no single party wins a majority of seats many parties get together based on compromise and tolerance.